Wednesday, 3 October 2012

This from Captain Deltic...May I join in Eye's exciting new feature?From the Modern Railways editorial in the October 2012 edition...With eight franchise to go out to tender in the next 11 months it can’t go on like this, irrespective of the outcome of Virgin’s challenge. In one of his outburst Virgin’s Sir Richard Branson repeated the famous dictum that insanity is repeatedly doing the same thing and expecting a different outcome.

Twenty years after rail franchising was created, it is time to end the insanity and try a more rational approach to running the railway.Concessions anyone?

It suggests the government may have trouble under the new policy
finding people to bid the big premia they want (this was obviously partly
wrong, but the columnist didn't know they would keep approving over-optimistic
bids by just doing the sums wrong).

It concludes that the poorly worked-out
bits of the policy "will also almost certainly produce greater problems than the government anticipates".

It's
a pity really that Rail Professional no longer features some of these astute
columnists. But no doubt they've gone on to better things...

The Transport Select Committee will call the Secretary of
State for Transport, Patrick McLoughlin MP, and the Permanent Secretary at the
Department for Transport, Philip Rutnam, to give oral evidence on the
cancellation of the competition to run the West Coast Main Line franchise on Wednesday
31 October at 2.45 pm.

Committee Chair Louise Ellman MP said:

It is astonishing that the
Government has had to cancel the West Coast Main Line franchise competition and
delay other competitions. Just last month the Secretary of State told us that
he was content with how the Department for Transport had handled the West Coast
Main Line competition and that Virgin’s challenge to the outcome would be
defended robustly.

I expect the Department’s review
of what went wrong to be available by the end of this month and we will want to
examine that very carefully. We will also want to know how much this episode
has cost the taxpayer, what lessons will be learnt, and what will be the wider
implications for franchising. In addition, I expect the Committee to look
closely at the Government’s review of franchising when it is published at the
end of this year

“Three officials involved in the West Coast franchise competition were
today suspended by the Permanent Secretary while the full facts are
established. No further details will be issued at this time about the
suspensions.”So Rutnam apparently lives to fight another day, whilst junior officials carry the can.

No doubt the Chairs of both the PAC and TSC will want to have a word with the Permanent Secretary, as the DfT's Principal Accounting Officer, about his department's squandering of over £40m of public money and the complete derailment of the franchising process.Perhaps Francis Maude also has a view?

This just in from Network Rail...Jo Kaye, currently route managing director for the London North Western route, is to take up a newly-created, senior role reporting directly to board member, Paul Plummer, group strategy director. She will move into the role upon her return from maternity leave in June 2013.

Replacing Mrs Kaye will be Dyan Crowther, currently director, operational services. Mrs Crowther will work with Jo to ensure a smooth handover during the next six weeks.

Fiona Dolman, head of operational planning, will become interim director leading the operational services team while an announcement for a permanent replacement will be made in the near future.Commenting on the changes, Paul Plummer said: "Jo will be an enormous asset to the strategy team bringing her years of operational and frontline experience to bear on a new challenge that will help to plot the strategic future of the business and the railway network.""Jo’s planned return to work will coincide with the concluding stages of the periodic review and we will be looking to embed our plans for CP5 into the business. At the same time, we will be increasing our focus on longer-term planning of the railway working closely with our customers and other stakeholders." Robin Gisby, director network operations, said: "Whilst I shall be sorry to lose Jo from my team, it is the right next move for her and will enhance the link between our business-facing leaders and our corporate strategy. Dyan is an experienced and well-respected operator who has done a great job in developing operational services and building customer relationships that have been central to making devolution work. Dyan is extremely well qualified to succeed Jo and take on the challenge of running our biggest route."

This from the Association of Train Operating Companies...Responding to today’s DfT announcement, Michael Roberts, Chief Executive of the Association of Train Operating Companies (ATOC) said:

“The discovery of significant flaws in the DfT’s franchising process is a cause of great concern. It is in the interests of passengers, taxpayers and the rail industry that the DfT solves these problems as a matter of urgency.

“Franchising private companies to run train services has delivered for the country, with rail travel more popular now than at any time since the 1920s and near record levels of satisfaction and punctuality. The cancellation, however, of the InterCity West Coast franchise allows the DfT to reappraise its approach to franchising and implement rapid improvements.

“The two independent reviews will need to restore the confidence of taxpayers and passengers, and those who might want to bid for franchises in the future. We look forward in particular to engaging with the review into the wider rail franchising programme.” No doubt this statement went through a number of iterations before the final polished version was released.

Eye prefers the honesty and sagacity of former DfT Permanent Secretary, Sir Richard Mottram, who said in 2002:

May I remind Eye readers of this paragraph from the March 2012 Informed Sources:For some time now, this column’s default assumption has been that the Department for Transport is dysfunctional. This has shown up in the repeated corrections Aviation & Rail Minister Theresa Villiers has had to make after misleading the House of Commons with incorrect answers to written questions. And sometimes, blatant errors have not been corrected (this column passim).

It appears the chickens have finally come home to roost, not that I want to say I told you so.

(Capt D - there is a very fine line between being wise before the event and coming across as a smug git! Ed)

According to the Department for Transport the InterCity West Coast franchise competition has been cancelled due to "the way the procurement was conducted by department officials".Using your skill and judgement you can help Patrick McLoughlin determine who should carry the can for this shambles?

The survey is in the usual position on the right hand menu bar... get voting!

Remember, owing to their simplicity, no "significant technical flaws" have been discovered in any Eye survey to date!

Transport Secretary Patrick McLoughlin has today announced that the competition to run trains on the West Coast Main Line has been cancelled following the discovery of significant technical flaws in the way the franchise process was conducted.

The decision means that the Department for Transport (DfT) will no longer be awarding a franchise contract to run the West Coast service when the current franchise expires on December 9. It is consequently no longer contesting the judicial review sought by Virgin Trains Ltd in the High Court.

The flaws uncovered relate to the way the procurement was conducted by department officials. An announcement will be made later today concerning the suspension of staff while an investigation takes place.

The Government is resolving urgently the future arrangements for operation of the West Coast and will ensure that train services continue uninterrupted. Mr McLoughlin stressed today that passengers will continue to be served by the same trains and frontline staff.

The Transport Secretary has also:

Ordered two independent reviews to be undertaken urgently: the first into what went wrong with the West Coast competition and the lessons to be learned, the second into the wider DfT rail franchise programme, both overseen by leading business figures;

Asked officials to examine the options for the operation of the West Coast service after December 9, taking into account procurement and competition law;

Paused all the other outstanding franchise competitions (Great Western, Essex Thameside and Thameslink) pending the independent reviews which are designed to ensure future competitions are robust and deliver best value for passengers and tax payers.

Mr McLoughlin said:

“I have had to cancel the competition for the running of the West Coast franchise because of deeply regrettable and completely unacceptable mistakes made by my department in the way it managed the process.

“A detailed examination by my officials into what happened has revealed these flaws and means it is no longer possible to award a new franchise on the basis of the competition that was held.

“I have ordered two independent reviews to look urgently and thoroughly into the matter so that we know what exactly happened and how we can make sure our rail franchise programme is fit for purpose.”

He added:

“West Coast passengers can rest assured that while we seek urgently to resolve the future arrangements the trains that run now will continue to run, with the same drivers, the same staff and timetables as planned. The tickets that people have booked will continue to be valid and passengers will be able to make their journeys as planned.”

DfT permanent secretary Philip Rutnam said:

“The errors exposed by our investigation are deeply concerning. They show a lack of good process and a lack of proper quality assurance.

“I am determined to identify exactly what went wrong and why, and to put these things right so that we never find ourselves in this position again.”

The first independent review will be an urgent independent examination into the lessons to be learned from the Department’s handling of this competition. Conducted by independent advisers and overseen by Centrica chief executive Sam Laidlaw and former PricewaterhouseCoopers strategy chairman Ed Smith, both DfT non-executive directors, this review will look as soon as possible at what happened and why with a view to delivering an initial report by the end of October.

The second independent review will be undertaken by Eurostar chairman Richard Brown CBE, and examine the wider rail franchising programme. It will look in detail at whether changes are needed to the way risk is assessed and to the bidding and evaluation processes, and at how to get the other franchise competitions back on track as soon as possible. This will report back by the end of December.

Evidence of significant flaws in the Department’s approach emerged while officials were undertaking very detailed evidence-gathering in preparation for legal proceedings in the High Court.

These flaws stem from the way the level of risk in the bids was evaluated. Mistakes were made in the way in which inflation and passenger numbers were taken into account, and how much money bidders were then asked to guarantee as a result.

The Department cannot be confident that these flaws would not have changed the outcome of the competition or that any of the four bidders would not have chosen to submit different offers.

The DfT has spoken to the four bidding companies to inform them of the flaws that the Department discovered. The DfT will reimburse their bid costs and has assured them that a fresh competition will be started as soon as the lessons of this episode are learned.

Notes to Editors

Richard Brown, the chairman of Eurostar, is a former chief executive of Eurostar and previously commercial director and a main board director of National Express Group, where he set up its UK Trains Division, at the time the largest UK passenger franchise operator. He has spent 35 years in the transport industry and was a director of British Rail’s Intercity Division before privatisation.

Sam Laidlaw has been chief executive of energy company Centrica since July 2006 and has been a non-executive director of HSBC Holdings Plc since January 2008. He has been the lead non-executive board member of the Department for Transport since December 2010 and is also a member of the UK Prime Minister’s Business Advisory Group.

Ed Smith is a non-executive board member of the Department for Transport and was formerly chairman of strategy for PricewaterhouseCoopers, deputy chairman of the Higher Education Funding Council for England, as well as chair of their Leadership, Governance and Management Strategic Advisory Committee.